Factory output in July: Index of Industrial Production (IIP) rises by 2.6 per cent

BusinessIIP for June was revised upwards to a decline of 1.78 pct from a provisional 2.2 pct dip in production. Reuters
After contracting for two straight months, factory output (Index of Industrial Production - IIP) in India entered the positive zone in July, recording a growth of 2.6 per cent on account of improved performance of manufacturing and power sectors.

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Factory output measured in terms of the IIP had contracted 0.1 per cent in July last year, as per the data released by Central Statistical Organisation today.

Meanwhile, IIP for June was revised upwards to a decline of 1.78 per cent from a provisional 2.2 per cent dip in production. It contracted by 2.8 per cent in May this year.

IIP graphs

During April-July this year, factory output contraction remained flat at 0.2 per cent.

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The manufacturing sector, which constitutes over 75 per cent of the index, grew by 3 per cent in July compared to zero growth in the month a year earlier. During April-July, the sector saw a decline of 0.2 per cent compared with a contraction of 0.6 per cent in the period last year.

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Power generation increased by 5.2 per cent in July as against a growth of 2.8 per cent in same month in 2012. Power generation in the April-July grew 3.9 per cent compared with an expansion of 5.5 per cent in same period last year.

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Output of capital goods, a barometer of demand, grew by 15.6 per cent in July compared with a decline of 5.8 per cent in the same month a year earlier. During April-July, capital goods production grew 1.8 per cent compared with a production drop of 16.8 per cent in same period last year.

Meanwhile, the mining output declined 2.3 per cent in July, compared with a dip of 3.5 per cent. In April-July, the sector declined 4 per cent compared with a contraction of 2 per cent in the corresponding period.

Among the 22 industry groups in the manufacturing sector, 11 recorded positive growth in July.

Consumer goods output contracted 0.9 per cent in July, compared with expansion of 0.7 per cent in the same month last year. Production of these goods declined 2 per cent in April-July compared with growth of 3.1 per cent in the same period of 2012.

IIP graphs

The decline in output of consumer durables stood at 9.3 per cent in July, from a growth of 0.8 per cent previously. The segment saw a 12 per cent decline in output in April-July compared with growth of 6.1 per cent.

Consumer non-durables output expanded 6.8 per cent in July against a contraction of 0.6 per cent a year earlier. The segment grew 6.8 per cent in April-July compared with growth of 0.6 per cent.

Growth in intermediate goods production was at 2.4 per cent in July as against 0.1 per cent a year ago. For April-July, the segment's expansion was 1.8 per cent compared with 0.6 per cent in the same period a year ago.

Basic goods output grew by 1.7 per cent in July from a growth of one per cent in July 2012. Production of these goods grew by 0.2 per cent in April-July compared with growth of 2.7 per cent a year earlier.

Commenting on the IIP data, Economic Affairs Secretary Arvind Mayaram said, "Growth is likely to pick up from now onwards."

Decisions of the Cabinet Committee on Investment should get reflected in the growth numbers, he said, adding that the second quarter would be better than the first quarter.

Foreign direct investment in the first quarter was encouraging, he said. During April-June, FDI into India grew 22 per cent to USD 5.39 billion from USD 4.42 billion in the same period in the previous year.

Sectors that received large FDI inflows during the first quarter include pharmaceuticals (USD 1 billion), services (USD 945 million) and the automobile industry (USD 515 million).

FDI increased by about 16 per cent year-on-year to USD 1.44 billion in June, which is the lowest figure during the calendar year. In June 2012, the country had received FDI worth USD 1.24 billion.

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